Mice without secreted TNF but with functional, normally regulated and expressed membrane-bound TNF (memTNF^Δ/Δ mice) were created by knocking-in the uncleavable Δ1-9,K11E TNF allele. In contrast to TNF-deficient mice (TNF^−/−), memTNF supported many features of lymphoid organ structure, except generation of primary B cell follicles. Splenic chemokine expression was near normal. MemTNF-induced apoptosis was mediated through both TNF-R1 and TNF-R2. That memTNF is suboptimal for development of inflammation was revealed in experimental autoimmune encephalomyelitis. Disease severity was reduced in memTNF^Δ/Δ mice relative to wild-type mice, and the nature of spinal cord infiltrates resembled that in TNF^−/− mice. We conclude that memTNF supports many processes underlying lymphoid tissue structure, but secreted TNF is needed for optimal inflammatory lesion development.